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Facts
The assessee, a salaried individual and Principal of a school, did not file an income tax return believing he had no taxable income. The department, having information of significant cash deposits (₹3,65,19,694), initiated reassessment proceedings under Section 147 of the Income Tax Act, 1961. The Assessing Officer completed the assessment ex-parte after the assessee failed to respond to notices, adding the entire deposit amount to his income under Section 69A.
Held
The Tribunal noted that the CIT(A) had set aside the assessment for fresh adjudication without deciding the crucial issue of the jurisdiction for reopening. The Tribunal found that the matter required extensive factual verification and directed the CIT(A) to dispose of the issues on merits after providing the assessee with an adequate opportunity of hearing and considering all material facts and documents.
Key Issues
Whether the reopening of assessment was valid and based on sufficient grounds and material, and whether the CIT(A) erred by not deciding the jurisdictional issue before setting aside the assessment for fresh adjudication.
Sections Cited
139(1), 147, 148, 144, 144B, 69A, 153(3), 251(1)(a)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO
This appeal by the assessee is emanating from the impugned order dated 17/10/2024, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2014–15.
2. The assessee has raised following grounds:–
“1. That the order passed is bad in law and on facts. 2. That the CIT(A) failed to consider that the reopening of assessment is without jurisdiction and as such entire proceedings are bad in law and on facts. 3. That the reopening of assessment is based on assumptions and surmises without any evidence and investigation and as such the entire proceedings are without jurisdiction and bad in law.
2 Ganesh Mahadeorao Thaware ITA no.623/Nag./2024
4. That the notice of reassessment is issued without application of mind and as such bad in law and needs to be deleted. The entire proceedings on the basis of such notice also needs to be deleted.
5. That the reopening based only on the information from NMS Category of AIMS module is not sufficient without any further evidence to reopen the assessment and as such the entire proceedings are bad in law and on facts.
6. That in absence of any live link between the information and the appellant the proceedings are without jurisdiction. 7. Any other ground arising out of the order which may be raised at the time of the appeal for which the appellant craves leave.”
3. There is a delay of 03 days in filing the present appeal by the assessee. Since the delay being minor, we condone the delay.
The assessee is a salaried individual, who did not file return of income believing that he did not have taxable income. During the year under consideration, the assessee was working as the Principal of Arvind Indo Public CBSE School at Saoner in Maharashtra. As per the information available with the Department that during the year, the assessee has made cash deposits of ` 3,65,19,694, whereas no return of income was filed under section 139(1) of the Income Tax Act, 1961 (“the Act”) for the relevant year of assessment. The Assessing Officer observed that since the assessee's income is above the basic limit of tax exemption, it was mandatory for the assessee to file return of income within the prescribed time limit. However, the assessee has not complied to this legal requirement. Hence the assessment was reopened under section 147 of the Act and notice under section 148 dated 28/03/2021 was served on the assessee's registered e-mail requesting him to file a return of income. It was further noticed by the Assessing Officer that the assessee has not filed any return of income in response to notice under section 148
3 Ganesh Mahadeorao Thaware ITA no.623/Nag./2024 within 30 days from the date of receipt of the notice prescribed in the said notice. Since there was no response from the side of the assessee despite issuance of several statutory notices/show cause notice, therefore, based on the material available on record, the Assessing Officer completed assessment under section 147 r/w section 144 r/w section 144B of the Act ex–parte and made addition of ` 3,65,19,694, under section under section 69A of the Act, which was added to the total income of the assessee.
5. On appeal, the assessee challenged the re–opening of assessment before the learned CIT(A) amongst other grounds as well. However, the learned CIT(A) set aside the assessment for fresh adjudication to the file of the Assessing Officer without deciding the issue of invocation of jurisdiction for reopening of assessment. The decision of the learned CIT(A) is extracted below for ready reference:–
“5. Decision (i) I have gone through the material on record including the contents of assessment order, grounds of appeal with statement of facts filed by the assessee. (ii) The condonation of delay is granted. (iii) On going through the submissions filed by the assessee I am of the considered opinion that the issues contained in the response of the assessee require extensive enquiries and verification which may not be possible with the machinery available at the level of Commissioner (Appeals). It would best serve in the interest of justice if the appellant gets another chance to represent his case before Ld. AO and thereupon Ld. AO can verify the submission of the assessee and conduct necessary enquiries to gather material for a true and correct estimation of income of the appellant. Directions for compliance by the Assessee as well as AO are being issued. (iv) Amongst the Grounds of appeal, there is a legal contention of the appellant, that contention of the appellant with the assessment order is bad in law. Further, in the interest of justice and fair play, the assessment order is being set-aside to AO for fresh adjudication.
4 Ganesh Mahadeorao Thaware ITA no.623/Nag./2024 (v) As far as all other grounds of appeal of the appellant are concerned the main grievance relates to non-verification of the details and passing of best assessment order. Considering that the matter requires extensive factual verification the assessment order is set aside and the Assessing Officer is directed to make a fresh assessment after giving adequate opportunities to the appellant and complying with all extant rules and provisions and following principles of natural justice. The appellant may note that all necessary compliance should be made at the earliest and within the time limit prescribed in the notices issued by Ld AO. It should be the endeavor of the Appellant to promptly submit necessary evidences in support of his Income tax return, suo- moto or as required by the Assessing Officer without causing undue delays leading to submissions towards the fag end of the limitation period. The assessment order is set aside accordingly in accordance with proviso to S 251(1)(a) with a direction to the AO to make a fresh assessment in accordance with rules and timelines prescribed u/s 153(3) of the Act.
The assessee being aggrieved is in appeal before the Tribunal.
6. The submissions of the learned Authorised Representative are as under:– “1. The appellant is a salaried individual.
For the relevant year, he did not have taxable income and as such did not file his return of income.
During the relevant year he was working as the Principal of Arvind Indo Public CBSE School at Saoner in Maharashtra.
4. The appellant is an upright well educated academician and has passed National Cadet Corps (NCC) "C" certificate examination, the highest awarded to a cadet by the Ministry of Defense. He has served as Officer in NCC for Vidyalaya NCC Troop for 6 years and granted Commission by the President of India under the Ministry of Defense.
As he was working in various cities, his income tax returns were filed by various persons. Whoever created the first registration on the income tax website gave his mobile number and email address as the contact details. These details did not belong to the appellant nor was he aware of the same.
The appellant came to know of the outstanding demand when the assessing officer approached his bank for recovery of the outstanding demands. On enquiry thereafter, he learnt that there were proceedings which had been initiated and in absence of any response the proceedings had been completed without his knowledge resulting in a demand of Rs. 3,57,49,480.
From the order it appears that the reassessment was initiated on the basis of information with the department from the NMS Category of AIMS module, 5 Ganesh Mahadeorao Thaware ITA no.623/Nag./2024 that during the relevant financial year the appellant had made cash deposits of Rs. 3,65,19,694 and no return of income was filed for the said year.
8. From the records available, it is apparent that no investigation was carried out before issuance of notice u/s 148 which was issued on 28-03-2021 9. No notice was served on the appellant and as such the appellant was not aware of any proceedings.
Other notices were also raised on the e-portal of which the appellant had no knowledge and since he was not at all aware of the proceedings no response was filed to any of the notices.
Without making any further enquiry and investigation it was assumed that there was cash deposit in the account of the appellant.
12.No details of the bank account in which the cash is supposedly deposited is available with the assessing officer as there is no mention of the same in the assessment order.
There is no live link of any account with the appellant.
For reasons in his order the learned assessing officer made additions of 3,65,19,694 under section 69A and completed the assessment under section 144 of the Income Tax Act. 15.Appeal was preferred against the order. 16.Among other grounds, the appellant had challenged the validity of reopening the assessment which was done without any documents on record. 17.For reasons given in his order, the Commissioner of Income Tax (Appeals) set aside the assessment for fresh adjudication without deciding the challenge to jurisdiction for reopening the assessment.”
7. On the other hand, the learned Departmental Representative supported the impugned order passed by the learned CIT(A).
We have heard the rival arguments, perused the material available on record and gone through the orders of the authorities below. Keeping in view the overall facts and circumstances of the case, we set aside the impugned order passed by the learned CIT(A) and restore the entire matter to his file to reframe the assessment denovo in accordance with law after considering all
6 Ganesh Mahadeorao Thaware ITA no.623/Nag./2024 the material facts and documents available before him. The learned CIT(A) is also directed to dispose off the issues raised by the assessee on merits and in accordance with law. Needless to say that the assessee be provided adequate opportunity of hearing. The assessee is also directed to adhere to the statutory notices promptly to be issued by the learned CIT(A) and furnish all necessary and relevant documents as per the directions of the learned CIT(A) during the re–assessment proceedings before him. Thus, all the grounds raised by the assessee are allowed but for statistical purposes only.
In the result, assessee’s appeal stands allowed for statistical purposes. Order pronounced in the open Court on 25/02/2025